Life Insurance

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Life Insurance

Life insurance is a mutual contract between the policyholder and the insurance company, where the company promises to pay a pre-specified amount to the nominee (if something happens to the policyholder) in return for a premium. Along with financial protection, people get tax deductions under Section 10(10D) & Section 80C of the Income Tax Act, 1961.

Importance of Life Insurance

Our life is full of risks and there is always an uncertainty of death due to illness and accidental causes. In case such a thing happens, the entire family has to suffer. Though human life can not be measured, a monetary sum can help the dependants to continue with their life without sacrificing their needs and requirements. And life insurance can help with that.

Let's understand the importance of life insurance through an example:

Varun and Sunil are childhood friends. Sunil decided to buy a life insurance policy and even told Varun to invest in the same. However, Varun rejected the idea and said it's a waste of money.

After a month, Varun and Sunil were returning home and met with an accident. Sunil died on the spot and Varun died in the hospital. Thanks to life insurance, the insurer offered complete financial support to Sunil's family. However, Varun's family were on their own and struggled to meet their needs. Had Varun purchased life insurance earlier, his family wouldn't have to go through such trouble.

Benefits of Life Insurance

There are several benefits that life insurance offers to the policyholders. Let's have a look at the most significant ones.

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Guaranteed Annuity

On the subject of planning for retirement, life insurance proves to be useful. Because you will be saving money over a while, life policies help in supplying a steady source of income.

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Loan Facility

Those who avail of life insurance have the choice of availing a mortgage towards their insurance coverage that may help them meet their unplanned requirements without hampering the advantages supplied through the policy they've purchased.

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Comprehensive Plans

Along with financial support, it also serves as a long term investment option. Many conventional life insurance plans (such as traditional endowment plans) offer specific maturity benefits via multiple product options like maturity values, cash values, money-back, etc.

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Tax Advantages

Life insurance offers appealing tax benefits and helps you save an extensive sum of money. Almost all life insurance policies offer you the benefit of the tax deduction on payment of premiums and provide a tax-free sum assured under Section 80C and 10(10D) of the Income Tax Act, 1961.

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Loan Reimbursement

Life insurance policies offer coverage of loans and mortgages availed by the policyholder. If there is any unforeseen situation due to which the policyholder isn't able to pay off his/her loan, the bereaved circle of relatives will no longer have the weight of compensation, and the policy can be used to pay off the mortgage.

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Insurance with Savings

In life insurance, the policyholder is required to make a set periodical payment. It allows the policyholder to get into the habit of financial savings. Saving cash over a lengthy time frame enables building a very good corpus to meet your economic necessities at unique levels of existence.

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Types of Life Insurance:

Term Insurance

It is the most basic form of life insurance. Simply put, if the insured dies during the policy tenure, term insurance offers a death benefit (in a lump sum) to the nominee as stated in the policy document. The pay-out can be on a monthly/annual basis.

Whole Life Insurance

As long as the policyholder is alive, this plan will offer life coverage in return for a small premium. On the policyholder's death, whole life insurance provides a sum assured and bonus (if any) to the nominee.

Endowment Plan

Unlike a term plan, the endowment plan pays you the sum assured along with the profits in the case of death and survival. This plan charges a higher premium, which is invested in the asset market (equity & debt).

Child Insurance Plan

It is a combination of insurance cover and investment that secure multiple stages of your child. In other words, it provides financial coverage to your child's future needs and allows you to plan his/her future in a better and stabilized way.

Pension Plan

This plan assists you in securing your post-retirement life financially. The benefits are given annually or once after reaching 60 years (depending on the insurer/policyholder). The plan offers a vesting benefit if the policyholder outlives the policy term.

Unit-Linked Insurance Plan (ULIPs)

In all the above plans, you don't have any option to select where you want to invest your money. The Unit-linked insurance plan (ULIP) gives you the authority to select the best way to invest your money (debt/equity). If you want to switch the current investment method, you can do the same easily.

Investment Plans

It's one of the core components of financial planning. An investment plan allows the policyholder to invest small amounts (in a periodic manner) to boost his/her savings. The frequency of investment can vary- weekly, monthly & quarterly. Along with savings, you get the benefit of insurance coverage.

Money Back Plan

Money-back plans are just like endowment plans with only a single difference- the payout can be staggered with the policy term period. In this, some part will be returned to the insured on a time to time basis (as per the policy tenure). In case of death, the sum assured amount will be paid to the nominee.

Life Insurance Riders

Riders are the add-ons that provide additional financial coverage to the policyholder. Mostly, the riders are bought along with the base insurance plan and can't be added later.

Popular life insurance riders are:-

  • Critical Illness Rider :- Major critical illnesses are covered under the rider, such as cancer, failure of kidneys, heart attack, coma, paralysis, etc.
  • Accidental Death Benefit Rider :- If the policyholder dies in an accident, this rider benefit along with the sum assured will be paid to the beneficiary by the insurance company.
  • Accidental and Total Permanent Disability Rider :- If the policyholder suffers from complete or partial permanent disability and is unable to work, this rider will provide the benefit to the policyholder.
  • Accelerated Death Benefit Rider :- If the policyholder is diagnosed with any life-threatening terminal illness such as leukemia, cancer, AIDs, etc., this rider will pay a part of the death benefit and can be used for the treatment of the policyholder.
  • Waiver of Premium :- If the policyholder suffers disability due to which (s)he is not able to pay the premiums of life insurance, the rider will waive off the premiums and the policy will continue with no restrictions.
  • Term Rider :- Term rider pays a fixed or monthly income to the beneficiary in case of the policyholder's demise. This is equal to the predetermined value mentioned in the policy or the base plan coverage.
  • Surgical Rider :- It assists the insured by providing financial coverage for medical treatment of listed surgical conditions. The cover differs for minor or major surgery treatments.

What Are The Factors That Affect Life Insurance Premium?

Several factors are considered by insurance companies while calculating insurance premiums. Some of them are listed below-

  • Age Of The Policyholder: Age is a significant factor while calculating the life insurance premium. As you grow older, the premium increases because there are higher chances of you getting sick and needing medical aid.
  • Lifestyle: If a person smokes/drinks/leads a stressful lifestyle, (s)he needs to pay higher premiums. This happens because such habits lead to life-threatening illnesses, lowering your life expectancy.
  • Medical History: If a person has a medical history of cancer, blood pressure, etc., the insurance companies charge a higher premium in return for the policy.

How to Choose the Best Life Insurance Policy?

With the availability of several life insurance plans in the market, it's quite confusing to choose the best among them. Thankfully, the below-listed pointers will help you make the decision.

Keep A Close Eye On The Claim Ratio

You buy life insurance to get a claim in the time of need. But what if that claim never sees the light of the day? Don't worry, there is a simple way to get around it. Before selecting a provider, you should check its claim ratio. This will give you a vague idea of the number of claims received & settled by a company in a single year. The company which has the highest ratio is your safe bet.

Background Check

Due to the competition, a lot of life Insurance companies have entered the market. Because of this, the industry is lacking quality providers. To be smart, you should check the background of each company. Whosoever facts match your expectations should be the one for you.

Evaluation Of Sum Assured

Before you start knocking on the doors of insurance providers, it is highly recommended to calculate your expected assured amount. Along with this, you can get an insight into premium calculation, which is done by the companies. Combine both the factors to know which company deserves your hard-earned money.

Customer Reviews Are Important

Sometimes, the company may look brilliant from the outside but runs with bad intentions from the inside. The best way to find such companies is via customer reviews. These reviews are posted by those people who have experienced (first hand) how such companies function & whether or not they keep true to their promises. Reading the reviews of such people can influence your buying decision.

Should You Compare Life Insurance With Jaeservices?

Definitely. It is a certified insurance regulator that has the full support of IRDA (License Number: IRDA/WBA17/14). But this is not the only reason why you should place your faith in Jaeservices. The other reasons are-

  • We allow you to get online quotes from different companies without paying a penny.
  • If you have any doubts regarding the plans or premium calculation, you can freely get in touch with our experts. They are 24*7 available at your service.

What Are The Documents Required To Buy Life Insurance?

If you have decided to buy life insurance, there are a few documents that you need to provide:

Age Proof: Driving License, 10th or 12th mark sheet, Birth Certificate, Passport, Voter ID, etc.

Identity Proof: PAN Card, Passport, Driving License, Voter ID, or Aadhar Card.

Address Proof: Electricity Bill, Telephone Bill, Ration Card, Driving License & Passport.

Income Proof: Latest form 16, salary slips of last 3-6 months, ITR (2-3 years), etc.

Some plans require a medical check-up to make sure that the insured does not suffer from any chronic illness. The company may ask for other documents as well.

How To File A Life Insurance Claim?

If a claimant follows all the required steps, then filing a claim and getting a sum assured can become a very convenient and hassle-free task. Read ahead to find how a claimant can file a claim in India under the following scenarios:

In case of the insured's death, the nominee/assignee of the deceased will be able to make the claim in the following way:

  1. Inform the insurer about the death as soon as possible with the important details such as time, place, and cause of death.
  2. Submit needful documents and proof to the insurance company. This will consist of the death certificate of the insured along with the claim form provided by the insurance company.
  3. If the policy was assigned, the assignee will have to provide the documents. If someone else (apart from the nominee or assignee) is filing a claim, (s)he has to submit the legal proof of his/her relation with the insured.
  4. If required, post-mortem, hospital, and attending doctor's reports have to be submitted.
  5. In cases involving police inquiries, an investigation/survey report will have to be submitted.
  6. Once the investigation is over, the insurance company will approve/disapprove the claim. The details of the same will be shared with the claimant.

In Case The Policy Is Matured

If the insured outlives the policy term, the respective insurance provider is liable to pay the maturity benefits, provided all the premiums have been duly paid. The procedure for filing a claim is as follows-

  • When the maturity of the policy is near, the insurance provider will send an intimation to the policyholder with a discharge voucher (at least 2-3 months of the date of maturity).
  • The policyholder has to sign the voucher and send it back to the provider with the original policy bond.
  • If the policy is assigned to someone else (individual/entity), the amount will only be paid to the assignee who will give the discharge.

Claim Process of Life Insurance

Claim Process of Health Insurance

There are two ways to make claim under a Health Insurance Policy: on cashless basis and on a reimbursement basis. In simple terms, for making a claim on cashless basis, the treatment must be done only at a network hospital of the insurance company servicing your policy. For availing the treatment, you would have to first seek an authorization as per the procedures laid down and in the prescribed form. In case of claims on reimbursement basis, the insurance company has to be informed as per their prescribed procedures. The policyholder has to ensure that documents such as claim form, discharge summary, prescriptions and bills to be submitted for reimbursement claim are obtained after hospitalization.

Cashless Service: Seeking Pre-Authorization

Complete the pre-authorization form available at the hospital's insurance/TPA Desk. Send the completed form via email or fax. Approved letter will be sent by the claim management team. Remember that the claim management team could send an inquiry to the hospital or you before authorization. In case the authorization is rejected, initiate the treatment and file claim for reimbursement.

Reimbursement Claim: Claim Submission

Complete the necessary form and submit along with required documents, as per the policy terms and conditions. Necessary documents include discharge summary, prescriptions, bills etc. Approved letter will be sent by the claim management team. Remember that you will be answerable to any queries raised by the claim management team before the letter is issued. In case the claim is rejected, the reasons will be communicated by the team. In case of any emergencies, you need to inform the insurance company within 24 hours of the admission. In case of planned emergencies, the notification has to reach the company 48 hours prior to the hospitalization. Note: If you are a Coverfox customer, you can directly reach out to us for all your claim-related issues and queries.

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